Through SPACs and IPOs we have a nice new collection of public Medicare Advantage MCOs, Alignment (ALHC), Oscar (OSCR), CLOV (CLOV) and Bright (BHG). It goes without saying the health insurance business is ruthlessly competitive, dominated by UNH, ANTM, CI and HUM which define the industry and make success difficult.
Not that some can't be successful. ALHC seems focused on its core markets and attrition is low – meaning they are replacing people that pass away or disenroll. Also worth noting is that ALHC has, for now, decided to watch and learn about the Direct Contracting program rather than jumping in with both feet. BHG seems the hottest prospect, pushing enrollment outside the OEP and generally behaving in a credible fashion.
OSCR made the pivot late to Medicare Advantage and still struggles. Their ACA products will get a boost if reconciliation includes an expansion of the ACA qualifying threshold for subsidies and they may just throw in the towel on MA and focus on their core competencies.
CLOV remains sketchy. They appear to have abandoned all sales efforts and put their eggs in the Direct Contracting bucket. They seem unable or unwilling to match their MA enrollment gains from 2020. Their unprecedented involvement in the Direct Contracting program - taking on 62,000 new lives to manage - seems like a bad idea given their record of cost management.
For this small players the usual "take out thesis" is going to be challenged by a new anti-trust posture that has expressly singling out consolidation in health insurance. Another trend to keep an eye on is the increasing acuity plans will need to manage as a result of delayed care during COVID. In short, best stick with the strongest of the lot if small insurance companies are your thing.
CMS’s latest enrollment data for July endorses these view.
Charts below.
Call with questions.
Emily Evans
Managing Director – Health Policy
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